Political concessions are very common in establishing strong regimes. Governments can try to resolve disputes by providing such concessions to the opposition. 1 In Syria, the authoritarian Assad government gave political concessions by lifting the emergency law and opening up a national dialogue with the opposition (BBC News 2011). Similarly, King Hussein resorted to concessions to quell the protests by Muslim Brotherhood in Jordan (Schwedler 2000). However, concessions are only one type of an instrument for negotiation.
Peace and stability may also be established by strengthening an army, thereby creating deterrence. Historically, repression has been used as an effective instrument to muffle the opposition’s office and entrench the status quo. One of the fundamental problems facing a government has been juggling concessions and repression. 2 Stolypin in Russia (1905–1910) appears to have been adept at balancing concessions and repression as agrarian reforms were combined with large numbers of death sentences (Rocco and Ballo 2008). Empirically, however, high levels of repression are associated with civil strife. 3 This paper provides a simple framework to think about how a rational government may balance concessions and repression to resolve a dispute with an opposition group.
Democratization can be thought of as an institutional process for giving political concessions to the opposition. Recent studies suggest that democratizing does not necessarily lead to peace. At the extreme ends of polity, both repressive authoritarian states and inclusive democracies have low levels of civil conflict, and middling levels of polity are correlated with civil conflict. Several studies find an inverted-U shaped relationship between probability of civil war and level of democracy (Ellingsen 2000; Fearon and Laitin 2003; Reynal-Querol 2002; Enterline and Greig 2005; Hegre et al. 2001). 4 This relationship can be thought of as a stylized fact. Yet, there appears to be no theoretically founded model in the civil war literature that sheds light on why the effect of political competition on conflict is non-monotonic. We find consistent results from our model that suggest that repression is correlated with conflict until a threshold level of political competition, but there is no link between repression and conflict once this threshold is crossed.
Theoretically, political concessions to the opposition group could be with or without an increase in repression. Moreover, concessions and repression may be substitutes or complements in equilibrium. Our paper sheds light on the interplay between concessions, repression and institutional regimes to influence conflict and peace. Fearon (1995) lists two possible rational causes for war: one is a credible commitment problem for the state and the second is asymmetric information between the two parties along with incentives to misrepresent private information. Whereas Acemoglu, Ticchi and Vindigni (2011) focus on the first mechanism in Fearon (1995) to explain the correlation of civil wars and repression, we rely on the second. 5 We do so because it “buys” us a greater degree of freedom in the government using another instrument (concessions) which is not merely the reversal of repression, as in Acemoglu, Ticchi and Vindigni (2011). In our model, the opposition group knows its type that is hidden from the government. This is an important assumption because if there was no asymmetric information about the type (for example, finances, motivations, military capacity, organization, etc.), the government would be able to pay off the opposition group and avoid a costly fight. 6
Our theoretical model predicts civil wars where the government bargains with a group using two instruments: repression and concessions. Concessions are the transfer from the government to an opposition group and repression is a military investment that increases the government’s chances of winning the war if it happens. We interpret an increase in quality of political institutions as increasing the minimum level of concessions from the state and repression as a form of coercive military control used by the state against an opposition group. In the situation where the government has asymmetric information about the opposition group, we highlight two cases. First, the equilibrium can induce transfers from the state to rule out any chance of civil war. This is shown to happen when there are sufficient constraints and regulations on the nature of political participation between the competing groups and is consistent with most modern democracies that hold “free and fair” elections and do not experience civil wars. Here, opposition parties can be seen to be more inclusive versions of rebel groups in war-torn nations. In contrast, the second type of equilibrium is repressive where wars can occur in equilibrium. The government rationally risks the state of war because state repression can guarantee greater payoffs for the incumbent until a threshold level of political competition is reached. The intuition behind the model is as follows. At the lowest levels of competition, increasing political competition increases the likelihood of war in equilibrium as states can still resort to repression and rationally choose to play a lottery between war and peace. However, since use of repression is limited by political competition, rebel groups attempt wars more frequently. Once a threshold level of political competition is achieved, it substantially decreases the probability of war by increasing the concessions to the competing group. This makes fighting especially less favorable because it decreases the spoils of war.
This paper is related to three strands in the political science and economics literature. First, it embodies the theoretical foundations of conflict wherein incentives and constraints of the two parties are modeled and conflict erupts through a contest function technology (see, for example, models by Skaperdas (1992) and Grossman (1991). Blattman and Miguel (2010) review the extensive research in economics and political science on civil wars and find that the theoretical and empirical literatures seldom intersect and there is a need to test implications of theory as well as model empirical consistencies. Further, theoretical models of conflict and repression are non-existent in economics (Besley and Persson 2011a). Conflict can have both institutional and strategic causes and theoretical models may choose to focus on either dimension. Thus, instead of endogenizing institutions as in Besley and Persson’s work, we focus on the technology of government bargaining against a rebel group by endogenizing repression. Our model is consistent with the observation that high levels of repression often go hand-in-hand with civil war. Thirty-nine countries are listed in Besley and Persson (2011b) that have had both, relatively long spells of repression and some civil war since 1950 (for instance, Afghanistan, Cambodia, Nicaragua and Ethiopia among others). Yet, there are also thirty-five cases where similar levels of repression have not led to a civil war (examples include, Bangladesh, Thailand, Ecuador and Kenya). The model in this paper gives a clear prediction on the likelihood of war with use of repression and finds heterogeneous effects depending upon the competition among political groups.
Second, in one of the only studies analyzing repression empirically, Davenport (2007) shows heterogeneous effects of democratization on human rights violations. 7 Repression is an endogenous variable in our framework as military power can deter opposition and also incapacitate it. Indeed, Azam and Hoeffler (2002) show that repression is effective against rebel groups. Not only is repression able to limit recruitment by rebel groups, weaponization and financing, it also increases the opportunity costs to individuals of engaging in violence (Tilly 1978; Rasler 1996). Similarly, providing concessions improves the outside options for the participants (Carey 2006). Autocratic rulers have also used both repression and seduction to maximize their revenue (Platteau and Sekeris 2013). Our model combines all these ideas into one formalized framework.
Third, empirical correlates of conflict are usually found by running linear models on a cross-sectional time series (Fearon and Laitin 2003; Collier and Hoeffler 2004; Reynal-Querol 2002). As our model predicts a non-linearity between repression and conflict depending on institutional constraints, we implement a Hansen (2000) test to calculate the threshold of political competition around which the relationship between repression and likelihood of civil war changes. The Hansen test has been employed recently in the sub-field of growth and development. For example, Girma (2005) explores whether the effect of foreign direct investment on productivity growth is dependent on absorptive capacity. The results point to the presence of non-linear threshold effects: the productivity benefit from FDI increases with absorptive capacity until some threshold level beyond which it becomes less pronounced. Similarly, Carter et al. (2007) study the conditions that would lead environmental shocks to push households into poverty traps from which recovery may not be possible without external assistance. They explicitly test for the existence of a critical threshold and directly estimate the critical asset threshold around which asset growth dynamics bifurcate. We test the predictions of our model through a threshold effects regression as in Hansen (2000) and find evidence of non-linearity in the relationship between probability of civil war and repression. This non-linearity depends upon the degree of political competition, as measured by the Polity IV data set. In particular, we find that until a threshold level of political competition, wars become increasingly likely with use of repression. Thereafter, there is no correlation between wars and repression, as expected from equilibrium predictions of the model. Peace is always attained without resorting to repression after crossing the estimated threshold.
There are two risk-neutral players – an incumbent government and an opposition group. Let
The government makes two political decisions. First, it decides the level of military investment to be used as repression against the opposition group, represented by
The opposition group has private information,
The game is played as follows:
- 1.The opposition privately observes
- 2.The government chooses military power
and transfer to the opposition group .
- 3.The opposition chooses whether or not to wage war against the government.
We assume that there are
If the opposition does not start fighting, then the payoff is
This means that the government wins if and only if the military power
The parameters are assumed as follows.
is non-increasing in .
and for all .
In the following, we derive a pure strategy perfect Bayesian equilibrium in which the players are sequentially rational and the government has a belief on the opposition’s type consistent with Bayesian updating. 10 We assume that the opposition group does not choose to fight if it is indifferent between starting a war and not. It assures us that the opposition’s best response is uniquely determined. We further assume that if the government has multiple best response to the opposition group, then it chooses the social optimum, i. e., the utilitarian optimal outcome amongst them. 11 Hereafter, we call our equilibrium concept political equilibrium.
2.1 Benchmark: Complete Information
As a benchmark, we first derive a political equilibrium where the government knows the opposition’s type
In case of complete information where the government knows the type of the opposition group, the government always chooses
Although peace is achieved independent of the opposition’s type, the equilibrium property depends on
As the polity becomes more competitive, the government does not use military power for peace. Assumption 1 guarantees that the thresholds
2.2 Asymmetric Information
In this section, we examine the case of asymmetric information. Even if the opposition’s type is private information, the condition for keeping peace is the same as in the symmetric information case; given
Similar to the case of symmetric information, the equilibrium property is either “concessive” where the government emphasizes the use of concessions or “repressive” where the government emphasizes military repression. When the government takes an optimal concessive strategy, it makes no military investment (
The optimal repressive strategy satisfies low transfers and high military power relative to the optimal concessive strategy. When the government chooses a repressive strategy, with probability
The marginal effect of increasing military power is decomposed into marginal benefit and the marginal cost. Specifically, the first derivative with respect to
Marginal benefit is equal to the marginal cost for optimal military power. In our model, however, such a military power may be above the cap of the military power
Summarizing the above discussion provides the characterization of the political equilibrium in the case of asymmetric information. To state the formal result, define
The equilibrium military strength and transfer
It should be emphasized that informational imperfections create a possibility of war. When the opposition’s strength is private information and the government chooses the repressive strategy, war takes place with probability
2.3 Comparative Statics
We now discuss how the parameter of political competition
There uniquely exists a threshold
Figure 2 draws the government’s payoff under the concessive and repressive strategies. The intersection of
In contrast, the payoff in the concessive equilibrium,
Figure 3 describes the probability of peace. For
The likelihood of peace is not monotonic with respect to the degree of competition. When
2.4 Other Contest Functions
The contest technology we adopt,
We would be able to obtain the same implication for other continuous contest functions. 18 Specifically, let the contest function be modified as
We leave the formal analysis of the model with the piecewise-linear function to the Appendix A.4. In case of complete information, there is still either a concessive or repressive equilibrium depending on parameter
The piecewise-linear contest function can be similarly illustrated as in Figure 5. The piecewise-linear contest function can approximate the discontinuous contest function by taking
3 Empirical Evidence
Our central hypothesis is that probability of civil war incidence should be positively correlated with repression across countries and time until a threshold level of political competition. For all values greater than this threshold, there should be no correlation between civil war incidence and repression. Formally,
To test for the model, an EITM approach is followed. We assemble data on civil wars and repression to operationalize our predictions from theory. We use the standard UCDP/PRIO (1946–2006) data set for capturing the incidence of civil wars, which will be the dependent variable. The variable “warinci2” measures the incidence of intrastate war and is coded 1 in all country years with at least one active war. 20 The variable “repression” is Political Terror Scale by the U. S. State Department from 1976–2006. It ranges from (1) to (5) in increasing order of state repression:
- (1)Countries under secure rule of law, people not imprisoned for their view, torture rare or exceptional, political murders extremely rare.
- (2)Limited amount of imprisonment for nonviolent political activity, few persons are affected, torture or beatings are exceptional.
- (3)Extensive political imprisonment, execution, political murders common, unlimited detention for political views accepted.
- (4)Civil and political rights violations have expanded to large numbers of population, murder, torture, disappearances common, only people interested in politics or ideas affected.
- (5)Terror has expanded to whole population.
Finally, the proxy for political competition is the variable “polcomp” from the commonly used Polity IV data set. The Polcomp index measures the two dimensions of political competition in a country: the first, the extent to which the alternative preferences of the opposition can be pursued, and the second, which focuses on the existence of rules that may limit the exercise of the right of expressing political preferences. Although “quality of institutions” that changes minimum concessions and maximum repression allowed is a more general term, we wanted to operationalize the concept that would allow for more “voice” to the opposition. Note that
3.3 Testing for Non-linearity
The test of non-linearity by Hansen (2000) involves a set of asymptotic procedures that estimate a threshold regression by least squares, compute confidence intervals for the parameters, and provide asymptotic simulation tests of the null of linearity against the alternative of a threshold. We aim to test the linearity of the relationship between repression and civil war incidence using political competition as our threshold. If, for example, the relationship is linear regardless of the level of political competition, the Hansen test will not reject the null of linearity. If the relationship is non-linear by level of political competition, the test should reject the null and estimate the threshold level of political competition around which the non-linearity occurs. Finally, we can also test for the strength of the relationship between repression and civil war incidence before and after the threshold. As described in the theoretical model, we predict a positive correlation between repression and civil war incidence before the threshold level of competition. However, after the threshold is reached, there should be no correlation as there is no use of repression and peace is achieved. Recall from the proposition in the previous section that there uniquely exists a threshold
Table 1 shows the results from the Hansen test and it strongly rejects the null of linearity between war incidence and repression with an F-test value of almost 112. Figure 6 also illustrates rejection of linearity as the sequence exceeds the critical value as provided by the test. Next, it estimates the threshold level of political competition around which the non-linearity exists. We obtain a value of 9 for political competition and this estimate is also the 95 % confidence interval for the threshold (note that political competition equal to 9 conforms to Democratic Retrenchment: Decreasing Overt Coercion as defined in the previous section). In Table 2, the relationship between war incidence and repression is presented separately: one for a regime where political competition less than or equal to 9 and one where it is equal to 10. We find a positive correlation between incidence of civil war and repression when political competition is under the threshold. This is consistent with the prediction of the repressive equilibria. There is no correlation between war and repression at the highest level of political competition. Theoretically, a concessive equilibria was achieved when there was no repression and only peace. Although the number of observations for the last category of political competition are only a sixth of the number for the first nine categories, we do observe a result consistent with our theoretical prediction based on comparative statics. However, note that these are mere correlations that complement the theory as there may be omitted variables that determine both repression and probability of civil war. Finally, Figure 7 shows the confidence interval for the political competition threshold graphically, i. e., where the sequence falls below the critical threshold at 9.
Test of null of no threshold against alternative of threshold.
|Under maintained assumption of homoscedastic errors|
|Number of bootstrap replications||1,000|
|F-test for no threshold||124.238|
|0.95 Confidence interval||[9, 9]|
Parameter estimation under the two regimes.
|Regime 1: polcomp≤9|
|Regime 2: polcomp > 9|
In order to test how the reverse causality issue might affect our results, we exclude country-years where polcomp changed during a civil war. The level of political competition might have changed because of the war and we do not want to use this variation to explain the non-linear relationship between repression and likelihood of war based on a threshold level of polcomp. Excluding all 49 such cases leads to similar results in Tables 3 and 4 that reject linearity with the same threshold value (equal to 9) for polcomp as before.
Test of null of no threshold against alternative of threshold excluding country-years when polcomp changed during civil war.
|Under maintained assumption of homoscedastic errors|
|Number of bootstrap replications||1,000|
|F-test for no threshold||112.411|
|0.95 Confidence interval||[9, 9]|
Parameter estimation under the two regimes excluding country-years when polcomp changed during civil war.
|Regime 1: polcomp ≤ 9|
|Regime 2: polcomp > 9|
Finally, we argue that the polcomp variable is relatively stable even during civil wars. This may be because it generally takes a long time to change the level of political competition in a country or because it is highly persistent. In Table 5 we show selected countries that did not have a change in political competition for extended periods of time during a civil war. Moreover, countries on either end of the political spectrum exhibit stability although it appears that totalitarian regimes are more stable during civil wars. For example, Afghanistan and Mozambique both exhibit institutionally closed systems during long periods of civil war. Latin American countries like El Salvador, Guatemala and Peru show factional competition but free elections and limited accommodation across factions for long periods during their respective civil wars. Colombia has close to an open electoral polity during almost a thirty year civil war. This is the variation we are using for the robustness checks in Tables 3 and 4.
Examples of countries with stable polcomp score during civil war.
|Country||Years of civil war||Polcomp value||Polcomp value interpretation|
|Afghanistan||1989–2006||1||Institutionally closed (de facto and de jure)|
|Chad||1965–1991||1||Institutionally closed (de facto and de jure)|
|Iraq||1968–2006||1||Institutionally closed (de facto and de jure)|
|Mozambique||1977–1990||1||Institutionally closed (de facto and de jure)|
|Sudan||1989–2000||1||Institutionally closed (de facto and de jure)|
|Vietnam||1955–1964||1||Institutionally closed (de facto and de jure)|
|Yemen||1962–1970||1||Institutionally closed (de facto and de jure)|
|Indonesia||1968–1992||2||Institutionally closed (de facto but not de jure)|
|South Africa||1966–1988||2||Institutionally closed (de facto but not de jure)|
|Zimbabwe||1972–1978||2||Institutionally closed (de facto but not de jure)|
|Iraq||1958–1967||3||Very limited and factional political competition|
|Nepal||1996–1998||5||Gradual transition from unregulated political competition to regulated political competition|
|Philippines||1946–1971||6||Factional competition/Faction-based restrictions|
|South Korea||1958–1950||6||Factional competition/Faction-based restrictions|
|Sri Lanka||1983–2000||6||Factional competition/Faction-based restrictions|
|El Salvador||1984–1990||7||Factional competition but free elections and limited accommodation across factions|
|Guatemala||1986–1995||7||Factional competition but free elections and limited accommodation across factions|
|Myanmar||1948–1961||7||Factional competition but free elections and limited accommodation across factions|
|Peru||1981–1991||7||Factional competition but free elections and limited accommodation across factions|
|Turkey||1993–1996||8||Democratic retrenchment with occasional use of military force by government against opposition|
|Colombia||1966–1994||9||Open electoral polities with transition to/from institutionalized competitive participation|
|France||1961–1962||10||Institutionalized open electoral participation; stable and enduring political groups compete without use of coercion|
Note: No country had a civil war with a polcomp value of 4 or Uninstitutionalized competition.
Civil wars are much more likely to end with peace agreements as opposed to on the ground (Eriksson and Wallensteen 2004). However, little is known about what mix of policy concessions and military power are more likely to work for ending wars. Moreover, this mix is likely to interact with existing institutions and resources in determining the future trajectory of war and peace. There has also been much empirical research on the non-monotonic relationship between democracies and civil wars. However, there is no micro-founded theoretical model that explains why this may be the case in equilibrium. We develop a simple model to allow the government to bargain with the opposition using two different types of instruments: concessions and repression. The equilibrium has only one of the following characteristics: either civil wars can happen or there is always peace. When civil wars can happen, repression is higher as compared to the peace equilibrium.
The choice between relenting to the demands of an opposition group and imposing repressive measures is often not mutually exclusive. Our model with complete information predicts that in order to prevent a civil war, the government should focus on either concessions or repression depending on political constraints. When degree of political competition is lower, the incumbent government resorts to greater military power for maintaining peace. If polity becomes more competitive, government’s discretion on military power wilts and greater resources must be redistributed to the opposition group. This makes repressive peace less attractive for the government and, as a result, the state achieves peace through high concessions. With asymmetric information, the equilibrium is either a state of perpetual peace where there are concessions but no repression or a state of repressive equilibrium that can lead to civil wars. The degree of political competition has a non-monotonic impact on the prevalence of civil war. Specifically, when degree of the electoral political competition is sufficiently low, political development may have a negative impact on peace since it may restrict the use of military investment for keeping peace. When competition is high enough, the government emphasizes concessions for maintaining peace. Once this threshold of political competition is crossed, repression should no longer be correlated with civil war.
The correlations from data bear out the comparative statics from the theoretical model. This threshold is estimated to be just below open institutionalized electoral participation using a Hansen test. This implies that the road to completely free and fair elections as well as open electoral participation is paved with conflict. In particular, we are likely to see repressive regimes and higher conflict in countries that do not achieve institutionalized open political participation. Recent examples of countries undergoing unsuccessful political development include conflict-prone nations in both Asia and Africa. Another implication of our model is that imposing a middling level of political competition is likely to lead to a repressive equilibrium and may stir greater conflict. Examples include efforts by the United States to establish greater democracy in Iraq and Afghanistan.
The theoretical model offers new insights into the microfoundations of why civil wars take place along with repression in closed polities. The result point towards further study of political institutions in the context of weakly institutionalized states or states undergoing a process of political development.
We are grateful to Khishigsuren Jargalsaikhan, Akhanda Shrestha, Darius Onul and David Beron for excellent research assistance, to Dean Greg Call for funding this study, and to Tim Besley, Gerard Padro-i-Miquel and two anonymous reviewers for their suggestions. We also thank seminar participants at the Southern Economics Association Conference, Midwest Economic Development Conference at Wisconsin Madison, London School of Economics, Kyoto University, the workshop on Frontiers of Statistical Analysis and Formal Theory of Political Science and the Kobe Sakura Meeting.
A.1 Proof of Proposition 1
Suppose that the equilibrium does not satisfy eq. . Note that since
Suppose that the equilibrium satisfies eq. . Then the opposition does not attempt war, which yields payoff
A.2 Proof of Proposition 2
First, suppose that the equilibrium satisfies that
Next suppose that the equilibrium satisfies
In problem (R’’), if
By assumption on
We now compare the payoff for the government under the concessive and repressive strategy. First suppose
A.3 Proof of Proposition 3
A.4 Formal Analysis of Piecewise-Linear Contest Function
In this section, we assume that the contest function
A.4.1 Complete Information
When the government knows the opposition’s strength
Suppose that the contest function
Similar to the basic model, given
We next consider an equilibrium when (1) is satisfied. The government’s payoff is
Then the solution satisfies
We now derive the equilibrium
Suppose that the equilibrium satisfies
A.4.2 Asymmetric Information
Similar to the complete information case, peace is achieved if and only if eq.  is satisfied.
Suppose that the equilibrium satisfies
Now suppose that
Suppose that the optimal
We admit that in general it is hard to derive a characterization of the optimal level of
B Data Appendix
The variable “polcomp” from Marshall and Jaggers (2007) takes the following values:
- (1)Repressed Competition – the polity is institutionally closed and the regime bans all organized opposition groups
- (2)Restricted Competition – the polity is institutionally closed and the regime systematically restricts major opposition groups
- (3)Deepening of Hegemonic Control – concerted effort on the part of hegemonic regimes to open up their political systems to limited political competition
- (4)Uninstitutionalized Competition – political participation is decentralized and fluid in character
- (5)Gradual Transition from Uninstitutionalized Competition – transition from (4) to more regulated forms of political competition
- (6)Factional/Restricted Competition – when one faction secures power it promotes its exclusive interests and favors group members while restricting the political access and activities of other, excluded groups, until it is displaced in turn.
- (7)Factional Competition – Relatively stable and enduring political groups which compete for political influence at the national level – parties, regional groups, or ethnic groups – but particularist/parochial agendas tend to be exclusive and uncompromising with limited social integration or accommodation across identity boundaries
- (8)Democratic Retrenchment: Persistent Overt Coercion – reflects the unconsolidated nature of liberal political participation in otherwise procedurally democratic polities
- (9)Democratic Retrenchment: Decreasing Overt Coercion – reflects relatively peaceful transitions either to or from institutionalized competitive participation
- (10)Institutionalized Open Electoral Participation – Relatively stable and enduring political groups regularly compete for political influence with little use of coercion. No significant or substantial groups, issues, or types of conventional political action are regularly excluded from the political process.
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See Schelling (1966) and Morris (1974) for further details. Acemoglu and Robinson (2000) show that the elite may be forced to choose between repression and the most generous concession, a transition to full democracy. However, it is possible to choose a combination of the two in a richer theoretical framework.
Indeed, civil wars have been triggered through excessive government repression in Algeria in 1992, Ivory Coast in 2002, Chad in 1963 and 1990, Kenya in 1982 and 1991 and in several other cases (Rocco and Ballo 2008).
However, Elbadawi and Sambanis (2002) find no robust inverted-U relationship between probability of civil war and democracy.
In weakly institutionalized polities, both the persistence of civil wars and the emergence of over-sized armies (or repression) are stylized facts. This is explained in Acemoglu, Ticchi and Vindigni (2011) as a dynamic commitment problem for the elite who cannot credibly commit to lowering repression once the civil war is over.
In the complete information case in our model, the government chooses repression and transfers such that it leads to peace. An interesting corollary of this result is that repression can arise even with complete knowledge about the opposition group. However, our focus in the paper will be in developing the asymmetric information case, discussing its comparative statics and finally, testing its central prediction.
Davenport (2007) finds that survival and tenure in office are the two primary aims of state repression.
Our main result still holds even if the institutional restriction has no impact on military discretion.
The government has no opportunity to update its belief. Hence the consistency of the beliefs does not matter here for characterizing equilibria.
If a change of
Formal proofs of all propositions are in the Appendix.
The timing of the game implies that the government makes a take it or leave it offer to the opposition. Thus, the government has full bargaining power over the surplus saved by avoiding a war.
The assumption that
It is possible to see that for each
We could modify the assumption such as timing or the choice set of the opposition, which may allow us to discuss possibilities of signalling. In this case, our model would still be valid. First, if the signalling action does not yield a full-separating equilibrium, then the government will still be faced with asymmetric information about the type of the opposition group and the structure of our model with asymmetric information would still be useful in providing insights about concessive and repressive equilibrium. Second, if the signalling action perfectly separates the type, then the situation will correspond to our benchmark model with complete information.
We have assumed that the parameter of quality of institution
We obtain the same result even if
War is defined by more than 1000 battle deaths.
Note that if